ISLAMABAD: The Federal Board of Revenue (FBR) has assured the documented steel sector of fixation of minimum value of steel products, strict enforcement measures in tribal areas, and software link with the distribution companies for updation of electricity consumption in sales tax returns.
Sources told Business Recorder, here on Thursday that the FBR has held a meeting with the large steel producers at the FBR House on the issue of revenue generation in steel industry.
The documented industry requested the FBR to intervene for taking measures to increase revenue generation as well as provide a level-playing field for the documented industry.
The meeting discussed the issue of fixation of minimum value of steel products.
It was decided to address the matter urgently.
The industry informed the FBR Member Inland Revenue Operations that the sale and use of invoices in the steel sector to increase input illegally and therefore evade tax is very prevalent.
Certain HS Codes/items need to be blocked for steel manufacturers to plug the loophole for tax evasion.
The industry appreciated the measures introduced by FBR Member IR Operations to bring tax evaders in the net who were mis-using the tax exemption status to FATA/PATA.
The industry recommended that the measures brought in force by the FBR are strictly enforced.
Further, industry recommended that at import stage FED in GST mode be levied on all steel items, so that the inputs of FATA/PATA companies can be documented.
This will help the government also assess the output liability.
According to sources, since local market prices are driven by a volatile international commodity prices, there is frequent change in domestic rebar prices.
The frequent updates on minimum invoice prices will remove a big loophole for sales tax evasion.
A quarterly update is recommended after due consultation with the association and market check by the FBR officials.
The industry recommenced that presently the entire downstream sector of the steel industry including retailers/wholesalers/traders remains undocumented due to the extremely high turnover tax.
In the interest of revenue as well as documentation, the industry recommended the reduction of turnover tax from 1.5 percent to 0.25 percent for downstream retailers.
It was agreed with the FBR that a software link with the DISCOs would be established so that the number of electricity units consumed would be automatically updated in Form K for any company filing a sales tax return.
Since a minimum amount of sales tax payable is calculated through the number of electricity units consumed, removing manual entry of the units consumed would remove a big loophole for sales tax evasion.
Also, there is need to insert a new row in annex “K“ where, both manufacturer could declare tolling quantity on the basis of units themselves in their sales tax return in Annex-K.
Copyright Business Recorder, 2021
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